The investment consists of primary and secondary share purchase transactions, CVCFL said in a statement. Of the total amount, Rs 7.80 crore ($1.2 million) is going toward buying a part of the stake held by IFCI Venture Capital Funds Ltd.

IFCI VC had invested $2.23 million in Him Teknoforge in 2011 for a 26.88 per cent stake. The statement didn’t say IFCI VC’s stake after the latest transaction.

Him Teknoforge, which was founded in 1981, will deploy the funds to upgrade its plant and machinery at its forging and machining units, the statement said.

“We have been looking for funds to expand/upgrade our operations to achieve the full capacities of the units and also to enhance the product value/ branding besides increasing our share of business from the existing customers as well adding new customers,” said Rajiv Aggarwal, executive director, Him Teknoforge.

Him Teknoforge makes forgings and machined components for use in farm machinery, automotive, railways, defence and oil and gas sectors. The firm supplies majority of its products to original equipment manufacturers such as Ashok Leyland, Swaraj Mazda, Escorts, Bharat Gears and Mahindra & Mahindra. The company is planning an initial public offering in the next two to three years, the statement added.

According to the statement, the size of the forging industry in India is estimated at about $3 billion at present with exports accounting for 20-25 per cent.

CVCFL, set up in 1989, was formed to invest in small and medium enterprises in various sectors. It has so far set up five funds with a total corpus of Rs 620 crore. In 2014, it had said that it was targeting its sixth venture capital fund with a target corpus of Rs 500 crore.

Its most recent investment was in a Bangalore-based pre-clinical research firm Bioneeds India Pvt Ltd for a minority stake for $3.7 million.